Auto Insurance

AAA

DEFINITION of 'Auto Insurance'

A policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident. Instead of paying out of pocket for auto accidents, people pay annual premiums to an auto insurance company; the company then pays all or most of the costs associated with an auto accident or other vehicle damage.

INVESTOPEDIA EXPLAINS 'Auto Insurance'

Auto insurance premiums, or the amount policyholders pay to be insured, vary depending on: age, gender, years of driving experience, accident and moving violation history, and other factors. Most states mandate that all vehicle owners purchase a minimum amount of auto insurance, but many people purchase additional insurance to further protect themselves.
A poor driving record or the desire for more complete coverage will lead to higher premiums. However, you can reduce your premiums by agreeing to take on more risk, which means increasing your deductible.

RELATED TERMS
  1. Underinsured Motorist Coverage

    An auto insurance policy provision that extends coverage to include ...
  2. Giuseppe Morchio

    An Italian executive who became CEO of Italian automaker Fiat ...
  3. Comparative Negligence

    A principle of tort law that applies to casualty insurance in ...
  4. Premium

    1. The total cost of an option. 2. The difference between the ...
  5. Risk

    The chance that an investment's actual return will be different ...
  6. Deductible

    1. The amount you have to pay out-of-pocket for expenses before ...
Related Articles
  1. The History Of Insurance
    Home & Auto

    The History Of Insurance

  2. 15 Insurance Policies You Don't Need
    Insurance

    15 Insurance Policies You Don't Need

  3. Free Car Payment Insurance: What's The ...
    Budgeting

    Free Car Payment Insurance: What's The ...

  4. Wheels Of A Future Fortune
    Home & Auto

    Wheels Of A Future Fortune

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center